House Bill 828

AN ACT TO BE KNOWN AS THE PRESCRIPTION DRUG FAIR-PRICING
ACT; TO PROVIDE FOR LEGISLATIVE FINDINGS AND DEFINITIONS; TO ESTABLISH THE
PRESCRIPTION DRUG PROGRAM WITHIN THE STATE DEPARTMENT OF HEALTH TO LOWER
PRESCRIPTION DRUG PRICES FOR UNINSURED AND UNDERINSURED RESIDENTS OF THE STATE;
TO PROVIDE THAT A DRUG MANUFACTURER OR LABELER THAT SELLS PRESCRIPTION DRUGS IN
THE STATE MAY VOLUNTARILY ELECT TO ENTER INTO A REBATE AGREEMENT WITH THE
DEPARTMENT; TO PROVIDE THAT THE DIRECTOR OF THE DEPARTMENT SHALL NEGOTIATE THE
TERMS OF THE REBATE; TO PROVIDE THAT IF A DRUG MANUFACTURER OR LABELER ELECTS
NOT TO AGREE TO A REBATE, THE DIRECTOR MAY PLACE THEIR PRODUCTS ON THE PRIOR
AUTHORIZATION LIST FOR THE MEDICAID PROGRAM; TO PROVIDE THAT THE DIRECTOR SHALL
PUBLICIZE TO HEALTH CARE PROVIDERS INFORMATION ABOUT THE RELATIVE COSTS OF
DRUGS PRODUCED BY THOSE THAT ENTER INTO REBATE AGREEMENTS COMPARED TO THOSE
THAT DO NOT ENTER INTO REBATE AGREEMENTS; TO REQUIRE RETAIL PHARMACIES TO
DISCOUNT THE PRICE OF PRESCRIPTION DRUGS SOLD TO PARTICIPANTS IN THE PROGRAM;
TO PROVIDE THAT ALL RESIDENTS OF THE STATE ARE ELIGIBLE TO PARTICIPATE IN THE
PROGRAM; TO PROVIDE THAT THE DEPARTMENT SHALL UNDERTAKE OUTREACH EFFORTS TO
BUILD PUBLIC AWARENESS OF THE PROGRAM AND MAXIMIZE ENROLLMENT; TO DIRECT THE
STATE BOARD OF PHARMACY TO ADOPT RULES REQUIRING DISCLOSURE BY RETAIL
PHARMACIES TO PROGRAM PARTICIPANTS OF THE AMOUNT OF SAVINGS PROVIDED AS A
RESULT OF THE PROGRAM; TO PROVIDE THAT THE DEPARTMENT SHALL REIMBURSE RETAIL
PHARMACIES FOR DISCOUNTED PRICES PROVIDED TO PROGRAM PARTICIPANTS AND
DISPENSING FEES; TO PROVIDE PROCEDURES FOR RESOLVING DISCREPANCIES IN REBATE
AMOUNTS; TO ESTABLISH A SPECIAL FUND IN THE STATE TREASURY TO RECEIVE REBATE
FUNDS FROM MANUFACTURERS AND ANY APPROPRIATED FUNDS FOR THE PROGRAM; AND FOR
RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE
STATE OF MISSISSIPPI:

SECTION
1. This act shall be known as
the "Mississippi Prescription Drug Fair-Pricing Act."

SECTION
2. (1) The Legislature finds that:

(a)
Approximately one (1) in four (4) residents of Mississippi have no or
wholly inadequate prescription drug insurance coverage.

(b)
These uninsured residents pay excessive prices for prescription drugs,
far higher prices that are paid by managed care organizations, insurance
companies and the federal government for the same medicines and dosages. In many cases, these excessive drug prices
have the effect of denying residents access to medically necessary care,
thereby threatening their health and safety.

(c)
Many residents require repeated doctor or medical clinic appointments,
having gotten sicker because they cannot afford to take the prescriptions
prescribed for them. Many residents are
admitted to or treated at hospitals each year because they cannot afford the
drugs prescribed for them that could have prevented the need for
hospitalization. Many others enter
expensive institutional care settings because they cannot afford their
necessary prescription drugs that could have supported them outside of an
institution. In each of these
circumstances, state medical assistance programs, including the Medicaid
program, literally pay the price.

(d)
One major reason uninsured residents pay so much for prescription drugs
is that, unlike insured residents, they have no prescription benefits manager
negotiating a fair price with the drug companies on their behalf.

(e) The state government is the only agent that,
as a practical matter, can play an effective role as a market participant on
behalf of all residents who are uninsured or underinsured. The state can and should act as a
prescription benefit manager, negotiating voluntary drug rebates and using
these funds to reimburse retail pharmacies for offering lower drug prices.

(2)
This act is enacted by the Legislature to create a program in which the
state acts as a participant in the prescription drug marketplace, negotiating
voluntary rebates from drug companies and using the funds to make prescription
drugs more affordable to Mississippi residents. Such a program will improve public health and welfare, promote
the economic strength of our society, and substantially benefit state health
assistance programs, including the Medicaid program.

SECTION
3. (1) As used in this section:

(a)
"Board" means the State Board of Health.

(b)
"Department" means the State Department of Health.

(c)
"Director" means the Executive Director of the State
Department of Health, or the executive director's designee(s).

(d)
"Labeler" means an entity or person that receives prescription
drugs from a manufacturer or wholesaler and repackages those drugs for later
retail sale, and that has a labeler code from the Federal Food and Drug
Administration under 21 Code of Federal Regulations, 207.20(1999).

(e)
"Manufacturer" means a manufacturer of prescription drugs, and
includes a subsidiary or affiliate of a manufacturer.

(f)
"Retail pharmacy" means a pharmacy or other facility or
business that dispenses or delivers prescription drugs to consumers in this
state and is registered with the State Board of Pharmacy under Section 73-21-105.

(2)
(a) The Prescription Drug
Program is established within the department to lower prescription drug prices
for uninsured and underinsured residents of the state.

(b)
A drug manufacturer or labeler that sells prescription drugs in the
state may voluntarily elect to enter into a rebate agreement with the
department.

(c)
The director shall negotiate the terms of the rebate from a manufacturer
or labeler, taking into consideration the rebate calculated under the Medicaid
Rebate Program under 42 USCS, Section 1396r-8, the average wholesale price of
prescription drugs, and any other available information on prescription drug
prices and price discounts.

(d)
If a drug manufacturer or labeler elects not to agree to a rebate, the
director may place those manufacturer's or labeler's products on the prior
authorization list for the State Medicaid Program, and take similar actions
involving prior authorization or formularies for any other state funded
prescription drug program. The board
shall promulgate rules creating clear procedures for the implementation of this
paragraph. The names of manufacturers
and labelers that do not enter into rebate agreements are public information,
and the department shall release this information to the public. The director also shall publicize to
doctors, pharmacists, and other health professionals information about the
relative cost of drugs produced by manufacturers and labelers that enter into
rebate agreements compared to those who do not enter into rebate agreements.

(e)
A retail pharmacy shall discount the price of prescription drugs sold to
participants in the prescription drug program.

(i) The department shall establish discounted prices for drugs
covered by a rebate agreement and shall promote the use of efficacious and
reduced-cost drugs, taking into consideration reduced prices for state and
federally capped drug programs, differential dispensing fees, administrative
overhead, and incentive payments.

(ii) Beginning July 1, 2003, a retail pharmacy shall offer
prescription drugs at or below the average wholesale price, minus six percent
(6%), plus a dispensing fee designated by the director. These initial price levels shall be
calculated by the director, and the dispensing fee shall not be less than that
provided under the State Medicaid Program.
The average wholesale price is the wholesale price charged on a specific
commodity that is assigned by the drug manufacturer and is listed in a nationally
recognized drug pricing file.

(iii) No later than January 1, 2004, a retail pharmacy shall offer
prescription drugs at or below the initial price levels specified in
subparagraph (ii) minus the amount of any rebate paid by the state to the retail
pharmacy. These discounted price levels
shall be calculated by the director. In
determining the discounted price levels, the director shall consider an average
of all rebates weighted by sales of drugs subject to these rebates over the
most recent twelve-month period for which the information is available.

(f)
All residents of the state are eligible to participate in the
Prescription Drug Program. The
department shall establish simplified procedures for issuing Prescription Drug
Program enrollment cards to eligible residents. The department shall undertake outreach efforts to build public
awareness of the Prescription Drug Program and maximize enrollment by eligible
resident.

(g)
(i) The State Board of Pharmacy
shall adopt rules requiring disclosure by retail pharmacies to Prescription
Drug Program participants of the amount of savings provided as a result of the
Prescription Drug Program. The rules
must protect information that is proprietary in nature.

(ii) The department may not impose transaction charges on retail
pharmacies that submit claims or receive payments under the Prescription Drug
Program.

(iii) A retail pharmacy shall submit claims to the department to verify
the amount charged to Prescription Drug Program participants.

(iv) On a weekly or biweekly basis, the department shall reimburse a
retail pharmacy for discounted prices provided to Prescription Drug Program
participants and dispensing fees set by the direction.

(v) The department shall collect from the retail pharmacies
utilization data necessary to calculate the amount of the rebate from the
manufacturer or labeler. The department
shall protect the confidentiality of all information subject to confidentiality
protection under state or federal law, rule or regulation.

(h)
Discrepancies in rebate amounts must be resolved using the process
established in this paragraph.

(i) If there is a discrepancy in the manufacturer's or labeler's
favor between the amount claimed by a pharmacy and the amount rebated by the
manufacturer or labeler, the department, at the department's expense, may hire
a mutually agreed-upon independent auditor.
If a discrepancy still exists following the audit, the manufacturer or
labeler shall justify the reason for the discrepancy or make payment to the
department for any additional amount due.

(ii) If there is a discrepancy against the interest of the
manufacturer or labeler in the information provided by the department to the
manufacturer or labeler regarding the manufacturer's or labeler's rebate, the
manufacturer or labeler, at the manufacturer's or labeler's expense, may hire a
manually agreed-upon independent auditor to verify the accuracy of the data
supplied to the department. If a
discrepancy still exists following the audit, the department shall justify the
reason for the discrepancy or refund to the manufacturer any excess payment
made by the manufacturer or labeler.

(iii) Following the procedures established in subparagraph (i) or (ii),
either the department or the manufacturer or labeler may request a
hearing. Supporting documentation must
accompany the request for a hearing.

(i)
The Prescription Drug Program Fund is established as a special fund in
the State Treasury to receive funds from manufacturers and labelers who pay
rebates and any appropriations or allocations designated for the fund. The purposes of the fund are to reimburse
retail pharmacies for discounted prices provided to Prescription Drug Program
participants, and reimburse the department for the costs of administering the
program, including contracted services, computer costs, professional fees paid
to retail pharmacies and other reasonable program costs. Unexpended amounts remaining in the fund at
the end of a fiscal year shall not lapse into the State General Fund, and any
interest earned on amounts in the fund shall be deposited to the credit of the
fund.

(j)
The department shall report the enrollment and financial status of the
Prescription Drug Program to the Legislature by the first week in December.

(k)
In implementing this section, the department shall coordinate with other
governmental programs to increase efficiency and, where it is beneficial to
another state program, combine drug pricing negotiations to maximize drug
rebates for this and other programs, including the State Medicaid Program.

(l)
The board may adopt rules to implement the provisions of this section.

(m)
The department may seek any waivers of federal law, rule or regulation
necessary to implement the provisions of this section.

SECTION
4. This act shall take effect and
be in force from and after July 1, 2003.